Nvidia's stock price reached a new high, but its year-to-date increase clearly lags behind the semiconductor sector. Institutions believe this "lag" actually provides a new buying window.

Source: Jinshi Data

Amid the expansion of AI computing demand and potential shifts in capital return strategies, Nvidia (NVDA.O) is becoming the focus of Wall Street once again.

Although the company's stock price reached a historic high for the first time since last October on Monday, its year-to-date increase still significantly lags behind the overall performance of the semiconductor sector, and this "lag" has become an important basis for bullish views from some institutions.

The Philadelphia Semiconductor Index rose over 36% in April and is nearly 50% above the 200-day moving average. Goldman Sachs' trading department pointed out that this level of divergence is rare since the internet bubble. In contrast, Nvidia's increase during the same period was only over 20%.

Extending the time frame to 2026, this gap has further widened: Nvidia has increased by about 15% this year, while the overall index gained close to 46%.

Trivariate Research mentioned in a report that over the past 3 months, Nvidia ranked only 49th among all semiconductor and equipment stocks, and even with a recent rebound, its relative performance remains low.

This structural gap has prompted the market to reassess Nvidia's valuation and strategic space. Bank of America analyst Vivek Arya believes that as ecosystem investments near completion, the company can conditionally reduce capital expenditure intensity and focus on shareholder returns, including increasing dividends and expanding buyback sizes.

This change may attract more income-oriented capital and alleviate market concerns regarding mergers and acquisition financing, thus driving valuation recovery.

Nvidia's shareholder return level is currently significantly low. The company's quarterly dividend is only 1 cent per share, corresponding to a dividend yield of about 0.02%, far below the industry average of 0.89%. Bank of America estimates that if the dividend yield were increased to between 0.5% and 1%, it would be close to Apple's (AAPL.O) approximately 0.4% and Microsoft's (MSFT.O) approximately 0.8% levels.

To achieve this goal, the required funding is about $26 billion to $51 billion, accounting for 15% to 30% of the 2026 free cash flow, while still accommodating both buybacks and ecosystem investments.

Trivariate's Adam Parker suggests from a long-term market value perspective that Nvidia has the potential to reach a $10 trillion market value by 2030. He pointed out that the company "is essentially more like an industry than a single enterprise," so when investors consider taking profits at certain stages, it actually forms a new buying logic.

Support on the demand side is also strengthening. JPMorgan analyst Harlan Sur expects that AI-related demand will drive Nvidia’s data center GPU business to achieve years of growth. Meanwhile, the short-term market conditions are more driven by CPU manufacturers.

Intel (INTC.O) significantly exceeded earnings expectations in the first quarter, leading to a nearly 24% one-day increase in its stock price, and AMD (AMD.O) also benefited concurrently.

On the supply side, the advanced locking of computing power demand is enhancing industry visibility. JPMorgan noted that clients are locking in capacity in advance to meet future computing demand growth, which allows Nvidia and Broadcom (AVGO.O) to have a longer order backlog leading into Fiscal Year 2027. The company has also disclosed that the demand visibility for its Blackwell and Vera Rubin architecture products has exceeded $1 trillion.

Although the mid-to-long-term logic is clear, short-term trends still face critical variables. This week, major cloud computing clients including Amazon (AMZN.O), Meta (META.O), Microsoft (MSFT.O), and Alphabet (GOOGL.O) will release earnings reports collectively, and their capital expenditures and AI investment rhythms may directly impact market judgments regarding Nvidia’s growth path.

Wedbush, led by Dan Ives, expects that before the disclosure of earnings by large tech companies, the market will continue to focus on AI monetization capabilities and capital expenditure trends, with overall performance this week still likely to remain strong. Nvidia itself is expected to announce its next earnings report on May 20.

Overall, institutional views are generally bullish. Visible Alpha statistics show that among 13 tracking analysts, 12 rated it as "buy," with an average target price of about $268, indicating about a 24% upward potential from current levels.